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Paper checks cost a lot of money to produce and transport to consumers and can be interrupted by weather and other events. For example, on September 11, 2001, the dispersion of checks that depended on air transportation came to a complete standstill after the terrorist attacks.


The option for consumers to utilize electronic payments has been around for a long time. Only recently has the Federal Reserve made a more concerted effort towards the electronic conversion of checks. As a result, consumers are getting charged more than ever before for their checking accounts.

Combine that with the cost of debit card transactions and automated tellers, it can be difficult keeping tabs on how much money is actually in your account. This typically will result in overdrafts, especially for people that live paycheck to paycheck.

Below are the basic methods money is taken out of your checking account:

Paper check
According to the Federal Reserve, paper check use is declining. However, over $50 million in payments annually are as a result of checks. The path of a typical check is one that covers the country by common land and/or air carriers until it reaches its destination bank and is either stored or returned back to you.

Check conversion
When you make a payment in a store via check, it is usually converted into an electronic payment. The check information is collected and a one-time debit is deducted from your account. When finished at the store, the check will be swiped through a machine, voided and returned back to you. This is called a point-of-purchase transaction. If you mail a check in and it is converted electronically, an image is generated and the check is destroyed. This type of electronic debit is called an 'accounts receivable conversion', or ARC.


Direct payment
This type of payment if for recurring bills like an auto loan, mortgage and/or utility bill. It is also commonly used as a means for routine payments into your savings account. The set-up is a one-time occurrence with payments being deducted automatically. Payments will continue to occur as long as you grant the authority. You will likely see these type of payments noted on your bank statement as an ACH payment.

Debit card
Debit card use has become very popular. In fact, they have made the greatest gains in terms of the number of transactions -- from 8.5 billion in 2000 to 16 billion in 2003. In contrast, credit card use grew at the most incremental rate over the same time frame. Debit cards are typically used to get cash from bank machines, ATMs, via a PIN (personal identification number) but can also be used similarly to a credit card. The fee for making debit card purchases is the same as the cost of using an ATM.

Used to transfer money between accounts and make cash withdrawals.

**Get more info about checking accounts.



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